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Yen Faces Headwinds As Crude Oil Gets Pricier

JPY

Fallout from the war in Ukraine remains a key driver of broader price action, with USD/JPY edging higher in early trade. Although Russia's military aggression against its neighbour is an obvious risk-off factor, the resultant surge in commodity prices is generating headwinds for the yen. Over the weekend, U.S. Secretary of State Blinken raised the prospect of an embargo of Russian oil, which pushed crude prices higher as the new week got underway.

  • USD/JPY has added 10 pips at trades at Y114.93. A break above Feb 15 high of Y115.87 would clear the way to Feb 10/Jan 4 highs of Y116.34/35. Conversely, a fall through Feb 24 low of Y114.41 would give bears a green light for targeting Feb 2 low of Y114.16.
  • The approval rating of Kishida Cabinet slipped 1pp to 57% in the latest Yomiuri poll, while showing strong support for Japan's economic sanctions against Russia.
  • Worth noting that the central government lifted Covid-19 pre-emergency measures in 13 prefectures from today.
  • Looking ahead, Japan's cash earnings, BoP current account balance & Eco Watchers Survey (Tuesday), final GDP (Wednesday), PPI (Thursday) & BSI Survey (Friday).

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